The growth and distributional consequences of international trade in natural resources and capital goods: a neo-Austrian analysis

Abstract

The problem explored is the role of natural resources in economic growth. A neo-Austrian model is constructed which can represent either a single, autarchic country, or a pair of trading countries, one of which can export natural resources and the other can export manufactured capital. It is shown that under autarchy, the price of the natural resource has no effect on economic growth, while under conditions of trade, it has a significant influence. Falling natural resource prices slow the growth in the resource exporting country and stimulate it in the capital exporting country. Some policy implications of this finding are explored.